IDENTITY THEFT FUELS RISE IN CONSUMER FRAUD CASES

Consumer fraud complaints soared 73 percent last year, and identity theft -- the stealing of personal information and the use of that information to run up bills or commit crimes in someone else's name -- accounted for the lion's share of the growth, the Federal Trade Commission reported recently.

American consumers reported losing $343 million last year to identity theft, bogus Internet auctions, Nigerian money-laundering schemes and other scams.

The Federal Trade Commission's annual report on consumer fraud is based on complaints made through its Consumer Sentinel project, a central clearinghouse for data on consumer scams.

The latest report chronicled 380,103 complaints, 161,819 of which involved identity fraud. In 2001, 220,089 complaints were lodged, and 86,198 of them involved identity crimes.

California was the leader in the number of consumer fraud cases, with more than twice as many fraud and identity theft complaints as any other state, according to the FTC. It is unclear whether California outpaces the country in reported fraud because it's the most populous state, because of a propensity for larceny, or because California residents are more likely to report crimes. On a per-capita basis, California ranked second to the District of Columbia in reported identity thefts and 13th in overall fraud.

Internet-based scams accounted for a good portion of the growth in reported fraud, FTC officials said. However, identity theft overshadowed all other categories, accounting for 43 percent of all crimes tallied. Worse, many experts believe the figures vastly understate the problem. That seems to be the case in California.

"The FTC statistics just reflect the victims who have called the fraud hotline," said California state Sen. Debra Bowen. "We know from our own research that's only a fraction of the people who have filed police reports."

For example, after the FTC reported that there were 1,335 identity crimes in Los Angeles in 2001, Bowen's office gathered police and sheriff's department records that showed there had been more than 13,000 identity theft crimes reported that year in L.A.

The FTC estimates that it costs the average victim $1,000 in long-distance phone calls, notary charges, mailing costs and lost wages to get his or her financial life back in order after an identity thief strikes.

The main problem, experts say, is that credit grantors are not compelled to check the accuracy of identifying information when issuing credit. The result is that thieves often can get credit in a consumer's name with nothing more than a Social Security number. Discrepancies in an applicant's address, employment history and, sometimes, gender are ignored by the firms granting credit.

Meanwhile, many companies and schools are careless with consumers' Social Security numbers, printing them on everything from health-care forms to student report cards.

"As long as companies insist on handling personal identifying information as junk rather than classified data, we are going to lose the game here," said Linda Foley, executive director of the Identity Theft Resource Center in San Diego. "It is in the disposal and dissemination of Social Security numbers where we become victims of identity theft."

Kathy Kristof writes for The Los Angeles Times, a Tribune Co. newspaper. She can be reached at kathy.kristof@latimes.com.